Wirral Council’s finance boss said £20m is needed this year as well as £20m next year to avoid the local authority going bust
13:48, 08 Jan 2025Updated 13:50, 08 Jan 2025
Wintry skies over Wallasey Town Hall and Wirral(Image: Colin Lane/Liverpool Echo)
Wirral Council is preparing to ask the government for an emergency £40m bailout as the local authority’s finance boss warned it is “highly likely” the council will have to issue a notice declaring effective bankruptcy if it doesn’t get the support. A new report said the council “faces a critical financial position.”
The local authority had already revealed it planned to apply for a request to the UK Government for exceptional financial support for up to £20m for the current financial year in December. According to the most recent figures put out by the local authority, Wirral is expecting to have gone over budget by £21.5m by March 2025 and will need to find £36m for the next financial year.
A new report, published ahead of the council’s Policy and Resources committee meeting next week has listed a number of recommendations including requesting a further request for up to £20m for the financial year from April 2025 to March 2026. The struggling council also plans to keep a spending freeze and recruitment controls in place “to limit expenditure to only absolute essential items” for this year and next year as well as issue redundancy notices if approved by councillors.
The report said nearly all available funds to the council will be used by the end of the year in order to balance the year’s budget. Director of Finance Matthew Bennett, who wrote the report, said: “This approach is neither prudent nor sustainable, potentially leaving the council vulnerable to unforeseen circumstances.”
He said previous actions taken by the council including a spending freeze from September, using money generated from property sales and contingency funds had helped but not eliminated the council’s financial problems, adding: “The current forecast financial position is not a sustainable position going forward and will therefore require additional support to resolve.”
Ahead of issuing a Section 114 notice, effectively declaring bankruptcy, the council can apply for emergency support, which will come in the form of significant borrowing, adding pressure to council budgets going forward as it needs to be repaid. Wirral Council has previously had to sell off assets it owns to pay back previous government bailouts.
The latest grim report comes after it was revealed auditors inspecting council finances had requested for their recommendations to be debated by councillors. This is because they believe the council did not have the arrangements in place to manage its finances and the extraordinary meeting will be held on January 14.
Two rapid reviews into this year and the next financial year are currently underway by the Chartered Institute of Public Finance and Accountancy. The institute previously inspected council finances back in 2021 and the council later had a watchdog panel appointed to oversee it.
That panel stepped down last year believing the council would be able to manage its finances without extra oversight going forward. Now the report warns it is highly likely a Section 114 notice will be issued.
According to the report, the £20m for this year will be used to mitigate the council’s budget black hole due to rising demand in social care while next year’s £20m would be used to “support the one-off transformation costs essential for driving service reform and operational efficiencies” as well as further social care costs.